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Glossary Of Important Terms and Conditions

Below you will find definitions for some of the terms and rules related to withdrawal liability.

CALCULATING THE VALUE OF THE UVB ERISA Section 4213(a) states that the amount of UVB is to be determined based on “actuarial assumptions and methods which, in the aggregate, are reasonable (taking into account the experience of the Plan and reasonable expectations) and which, in combination, offer the actuary’s best estimate of anticipated experience under the Plan.” The following represent the actuarial assumptions and asset method used by the Fund:

  • ACTUARIAL ASSUMPTIONS Use the investment return assumption used for funding purposes – currently 7.50% (net of investment-related administrative expenses) in order to determine the interest rate.
  • OTHER Use of the actuarial assumption used for funding purposes.
  • ASSET METHOD Use the actuarial value of assets including the pension funding relief elections made by the Directors with respect to the Preservation of Access to Care for Medicare Beneficiaries and Pension Relief Act effective December 31, 2010.

WITHDRAWAL LIABILITY ALLOCATION METHOD/CONTRIBUTION HISTORY For purposes of allocating the Fund’s UVB – if any – among the contributing employers in connection with a complete or partial withdrawal, the Fund uses the “presumptive” method which assigns each withdrawn employer a share of the change in the Fund’s UVB that developed during each of the last twenty (20) Plan years in which such employer was required to contribute, based on such employer’s contributions for the five (5) preceding Plan years.

In determining whether a withdrawal has taken place, the employer is aggregated with all other entities under “common control” with the employer, as that term is defined in ERISA and the Internal Revenue Code. Accordingly, if the employer is affiliated with one or more other business entities (e.g., a parent or a subsidiary, or a brother or sister, company), the Fund will take this into account in determining whether a complete or partial withdrawal from the Fund occurred and, if so, the amount of the withdrawal liability. Employers must provide the Fund with information necessary to confirm the entities under common control.

Effective December 31, 2010, the Directors reset the amortization pools to $0, since the UVB was $0 as of that date.

DE MINIMIS DEDUCTIBLE The Fund uses the $50,000 de minimis rule. Specifically, withdrawing employers with a withdrawal liability of $50,000 or less are relieved from having to pay withdrawal liability in a standard withdrawal.

Employers with a withdrawal liability between $50,000 and $100,000 have a deductible of $50,000 that is deducted from the amount due.

For liability amounts in excess of $100,000, the deductible is reduced by one dollar for every dollar of liability over $100,000. For example, if an employer had a withdrawal liability of $130,000, the deductible amount would be reduced by $30,000, leaving the employer with a deductible amount of $20,000 – resulting in a liability of $110,000. The deductible does not apply to employers withdrawing who have $150,000 or more in withdrawal liability.

DISREGARDING CONTRIBUTIONS OF OTHER SIGNIFICANT WITHDRAWN EMPLOYERS Pursuant to ERISA Section 4211(b), the Fund’s UVB is allocated to a withdrawing employer based upon a fraction representing the employer’s contribution over the total contributions to the Fund over five Plan year periods. However, contributions of other significant withdrawn employers are disregarded in the denominator of the fraction.

A significant withdrawn employer is defined as an employer that received a notice of withdrawal liability or has contributed at least $250,000 during any of the relevant five Plan years.

FREE-LOOK RULE The Fund did not adopt the optional “free-look rule” under ERISA for purposes of determining withdrawal liability for relatively new employers. As such, a new employer may be assessed with withdrawal liability by the Fund even if it contributed to the Fund for fewer than five consecutive Plan years.

PAYMENT OF WITHDRAWAL LIABILITY Once withdrawal liability is determined for a particular employer, a schedule of payments in accordance with ERISA based upon the employer’s recent contribution history is developed. An employer’s annual payment is equal to: (i) the average number of contribution base units for the three consecutive Plan years in which the number of units was the highest out of the last 10 Plan years preceding the Plan year of withdrawal, multiplied by (ii) the highest contribution rate at which the employer had an obligation to contribute under the Plan during the 10 Plan years ending with the Plan year of the withdrawal.

Withdrawal liability generally is paid for up to 20 years and shall be paid in quarterly installments.

A withdrawn employer will be in default and the outstanding amount of its withdrawal liability will be accelerated (with interest on the outstanding amount from the date of the first missed payment) and will be required to be paid to the Fund in a lump sum if the employer (i) fails to make a payment when due (and does not cure that non-payment within 60 days of notice from the Fund); or (ii) experiences an event (e.g., insolvency, liquidation, bankruptcy, etc.) that the Directors conclude indicates a substantial likelihood that the employer will be unable to pay its withdrawal liability.

Once the Fund assesses withdrawal liability and provides the employer with a payment schedule, the employer must commence quarterly payments, even if it wishes to contest the Fund’s assessment. As a procedural matter, an assessment may be challenged only by filing a written request for review with the Directors within 90 days of the employer’s receipt of the Fund’s initial withdrawal liability assessment.

After filing a request for a review with the Directors, the employer may initiate a binding arbitration regarding the assessment by making a formal filing (and paying the required fee) with the American Arbitration Association office in Los Angeles, California within 60 days after the earlier of: (i) the date that the employer is notified of the Directors’ decision on review; or (ii) 120 days after the date on which the employer requested the review. If an employer does not meet any of these time deadlines, the Fund’s determination will be deemed final and not subject to challenge in arbitration or court. The American Arbitration Association’s Multi-Employer Pension Plan Arbitration Rules for Withdrawal Liability shall govern for all withdrawal liability disputes resolved through arbitration.

INTEREST RATE AND LIQUIDATED DAMAGES FOR DELINQUENT WITHDRAWAL LIABILITY PAYMENTS If payment is not made when due, interest accrues from the due date until the date on which the payment is made at the interest rate (without applying any maximum limit for such rate) assessed for delinquent contributions as set forth under Article III, Section 5 of the Plan document. Delinquent withdrawal liability payments will also be assessed a liquidated damages penalty equal to the amount of liquidated damages assessed under Article III, Section 5 of the Plan document.

DATA COLLECTION In order to administer the Fund’s withdrawal liability procedures, the Fund will need to collect data from employers. This information is critical in order to determine whether a withdrawal occurred and, if so, the type of withdrawal (i.e., partial or complete) and the amount of withdrawal liability. Accordingly, upon learning of an actual or possible withdrawal, the Fund will notify the employer and will request any information necessary about the company (including its parent, subsidiaries or other affiliates) to determine whether a complete or partial withdrawal has occurred, and to calculate the amount of withdrawal liability. Employers are required by ERISA to promptly provide such information to the Fund, and any other pertinent information or documents that the Fund may deem necessary to fulfill its obligations under ERISA.